HUD pilot project takes bids on-line

The Department of Housing and Urban Development last year began a pilot project that requires all real estate brokers bidding on foreclosed HUD properties to submit bids via the Internet or telephone saving the department time and money.

Under the on-line bid submission pilot which is being tested in HUD's Fort Worth Texas office brokers electronically submit bids on properties that were purchased with Federal Home Administration (FHA) loans but are under default.

HUD employees who used to spend days opening sorting and comparing hundreds of bid packages up to 10 pages long simply look at a computer screen to pick winners.

The process also gives more leeway to the broker community. Previously many bidders on the properties met HUD's deadlines by overnighting or delivering their bids in person to the Fort Worth office which oversees HUD programs in 83 counties in north-central Texas.

"The brokers love it because they no longer have to drive their bids in " said Barbara Bates a real estate owned (REO) specialist for HUD's Fort Worth office.

The on-line bid submission pilot also gives brokers more time to submit bids. Under the paper system the time between a notice of sale of a foreclosed property and the opening of bids was 11 days. Under the electronic system however that time has increased to as much as 18 days.

The office also is expected to save money on newspaper advertising. Conley Andrews supervisor of REO sales and marketing in Fort Worth said the office spent about $960 000 last year on newspaper ads. This year the office could spend as little as one-fourth of that by posting the properties on its World Wide Web site (www.hud.org/fwhud/index.htm) Andrews said.

The new way of doing business also allows the office to post cancellations saving brokers the hassle of viewing a property preparing paperwork submitting bids and then finding out the property was withdrawn from bidding.

Overall the broker community appears to be pleased with the new system. Keith Bass president of Tower Communications Inc. Los Angeles the company that manages the electronic bid process said workers from his 35-employee company polled brokers served by HUD to determine their likes and dislikes and then worked to develop an on-line application that was easy to use "because we knew we were going to have brokers resistant to change."

On average his contract with HUD sees his company accepting and storing bids on $4 million to $5 million worth of property (about 150 bids) each day. About half the bids arrive by way of an automated telephone system for bidding.

HUD plans to expand the electronic bid submission system. But it is unclear when and how many HUD offices will be outfitted said Sandy Allison special assistant to Emelda Johnson deputy assistant secretary for single-family housing.

HUD operates 81 offices that handle FHA mortgage operations. The agency intends to consolidate those offices into several "region neutral" home-ownership centers by the Year 2000.

Allison said it is uncertain how many offices will be merged but the agency will not wait until 2000 to duplicate the electronic submission system.

"For the interim we will be putting the Fort Worth mechanism into some of our other offices " Allison said. "We'll see how it fits in" after the consolidation.